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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (47056)	10/15/2004 7:56:06 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Idea Of The Day - "I detest the man who hides one thing in the depths of his heart and speaks forth another" -Homer

To: IQBAL LATIF who wrote (47056)	10/15/2004 8:04:06 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

And reasons why market reacted positively to Greenspan's comments.. ''While high oil prices (a whopping $54.86 per barrel today at the close) have sliced about 0.75 percent off GDP growth, the effect won’t be nearly as bad as the 1970s oil crisis and the global economy will adjust.'' What is lowering oil intensity— it is lower oil consumption per dollar of gross domestic product (GDP) The answer--The United States has in fact been following the path of lowering oil intensity—oil consumption per dollar of gross domestic product (GDP)—since the late 1970s.It is reductions in oil demand per dollar of GDP, achieved through policy and market responses, that have gotten us to this point.The result-Wall Street rumbled up today—a triple witching day, when various options and futures expire—as traders absorbed economic data and Greenspan’s reassuring comments on oil. The total U.S. energy bill is still much less than it was in real terms in 1981 when the price in 2004 dollars was over $79 per barrel. At that time, the U.S. was spending 13% of gross domestic product on energy, according to the U.S. Energy Information Administration. By 2000, despite a surge in oil prices that year, the U.S. was paying just 7.2% of GDP for its energy. The EIA doesn't report figures for the years following 2000. But with oil prices at current levels, energy costs could reach 7.5% of GDP, the highest level since 1992. During the first eight months of this year, the price of oil has risen from just under $29. If prices stay at current levels--or even if they fall back a bit--the average price for the year will be around $39 per barrel. Last year, the U.S. consumed about 6.2 billion barrels, up 4.2% from a year earlier. At the same time, imports rose by 6.5%. If the price of oil stays a bit above $48 for the rest of the year, and usage continues to rise, the quarter-trillion oil bill will be a reality. Just over $170 billion of that total will flow overseas. Big Bill At The Spigot Year Price ($) Total Oil Consumption (in billions of barrels) Bill For Imported Oil ($bil) Total Oil Bill ($bil) 1981 $38.00 5.10 $74.91 $193.80 1999 17.51 5.76 63.35 100.94 2000 28.26 5.94 107.77 167.98 2001 22.95 6.10 91.31 139.91 2002 24.10 5.95 92.77 143.31 2003 28.50 6.20 116.89 176.57 2004* 39.00 6.46 170.36 252.02 Prices not adjusted for inflation. * Projected. Source: U.S. Energy Information Administration forbes.com Article--The United States has in fact been following the path of lowering oil intensity—oil consumption per dollar of gross domestic product (GDP)—since the late 1970s. Figures 1 and 2 show the historical trends in U.S. oil usage and intensity. Figure 1 shows the persistent rise of U.S. oil consumption and oil imports over the past 20 years, a period when domestic production drifted downward. Our imports are now above their 1970s oil-shock peak and, for the first time in history, exceed our own production. Advocates use these facts to argue for increased domestic production in the name of energy security. Figure 2 shows the more pertinent picture. Our vulnerability to oil disruption has been declining throughout this period because oil has come to play a smaller and smaller role in our economy. Oil disruptions are now less harmful to us than they have ever been, because our oil intensity is at a historic low and leverage of the remaining uses of oil on the GDP has not increased enough to offset this effect. rff.org